Warren Buffett says US economy being ‘resurrected in an extraordinarily effective way’

Berkshire, the conglomerate controlled by Warren Buffett, pictured in 2014, hosted a virtual AGM on Saturday. Photo: Bill Pugliano

Jonathan Stempel and John McCrank

May 03 2021 02:30 AM

Warren Buffett said on Saturday that the US economy is faring far better than he might have predicted early in the coronavirus pandemic, benefiting his conglomerate Berkshire Hathaway.

Speaking at Berkshire’s annual meeting, investor and tycoon Mr Buffett (90) said the economy has been “resurrected in an extraordinarily effective way” by monetary stimulus from the Federal Reserve and fiscal stimulus from the US Congress.

“It did the job,” and 85pc of the economy is running in “super high gear,” he said.

But Mr Buffett lamented how an influx of so-called special purpose acquisition companies and inexperienced investors hoping for quick riches have made markets feel more like a “casino,” making it hard for Berkshire to deploy more of its $145.4bn cash hoard.

The annual meeting was held in Los Angeles, where Mr Buffett joined Berkshire’s 97-year-old vice chairman Charlie Munger, to answer more than three hours of shareholder questions.

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Berkshire scrapped for a second year its annual shareholder weekend in its Omaha, Nebraska, hometown, an extravaganza that normally attracts around 40,000 shareholders.

Saturday’s meeting was broadcast online on Yahoo Finance.

Many of Berkshire’s dozens of operating units have been rebounding as anxiety over Covid-19 lessens, more people get vaccinated, stimulus checks are spent, business restrictions are eased and confidence about the economy grows.

Some economists project the US economy will grow in 2021 at the fastest rate in nearly four decades.

“People feel good,” Mr Buffett said, in discussing the economic environment.

“Charlie and I consider it the most interesting movie we’ve ever seen.”

Mr Munger, for his part, downplayed concern that US Congress and the White House might raise the corporate tax rate to 25pc or 28pc, saying it wouldn’t be “the end of the world” for the holding company.

Mr Buffett was markedly more upbeat than at last year’s annual meeting, which took place, early in the pandemic.

Berkshire also said it sold $3.9bn more stocks than it bought, though it still owned $151bn of stock in just two companies, Apple Inc and Bank of America Corp.